KARACHI: Pakistan Post needs to invest in streamlining its operations to comply with regulatory measures before undertaking any new initiatives to drive postal financial inclusion, a central...
KARACHI: Pakistan Post needs to invest in streamlining its operations to comply with regulatory measures before undertaking any new initiatives to drive postal financial inclusion, a central bank’s report said.
The SBP’s report said significant improvement in Pakistan Post’s manpower capable of delivering financial services would be required.
“This is all the more relevant given the country’s efforts to strengthen its AML/CFT (anti-money laundering / combating the financing of terrorism) regime,” it said.
The Pakistan Post was among the entities flagged in the Asia Pacific Group’s ‘AML/CFT mutual evaluation report of Pakistan’ for having grave deficiencies. The release of this report in October last year was followed by deliberations to significantly restructure the scope and operations of the Pakistan Post.
The Pakistan Post is a government owned entity that primarily provides postal services to around 20 million consumers. The institution has significant potential to enhance financial inclusion and mobilise savings in the country due to its widespread outreach.
“In order to be up to date and to compete with other financial institutions, Pakistan Post would have to invest in its technology infrastructure to stay relevant. Such investment has important and strategic externalities that outweigh the benefits in the long-run,” said the SBP’s report. “Provision of agriculture and livestock insurance schemes, generating local employment opportunities and collection of financial data of previously unbanked households are some examples that may motivate investment in this legacy institution.”
The SBP’s report said Pakistan Post can carry out all of this developmental and strategic work through meaningful collaborative efforts and partnerships with various public and private sector entities. “At present, the state of Pakistan Post is such that it needs a push to reinvigorate itself as an institution that can make a meaningful difference through its activities.”
The Pakistan Post launched a remittance service in June last year under the umbrella of the remittance initiative, in collaboration with the National Bank of Pakistan. The recipient can easily collect the funds from one of the designated 500 Pakistan Post branches or 1,500 NBP branches.
The service can further be expanded to include all post office branches (about 2,400), many of which are in areas not served by commercial banks. Moreover, the collaborating bank can provide simple account opening and ATM services at these post office branches in addition to the delivery of funds at the households’ doorsteps by the postmen.
By doing so, on one hand, international remittances would largely move to the formal sector adding on to the country’s foreign exchange reserves, while consolidation of savings in the formal sector would also pick up and gain traction over time.